Paying for solar is a financing decision as much as an electrical one. The system produces the same electricity whether you pay cash, borrow, or lease — but the money you spend to get it there can differ by thousands of dollars over the system's lifetime. This calculator puts all three options on one 20-year chart so you can see the true cost of each.
The three ways to pay
Cash means paying the full price up front. You own the system from day one, there is no interest, and every kilowatt-hour it produces is pure saving. The downside is simply the large initial outlay. A solar loan spreads the cost into fixed monthly payments; you still own the system, but the lender's interest adds 20–50% to the total depending on the rate and term. A lease or PPA puts a third party's system on your roof — you pay a monthly fee and they handle maintenance, but you never own it and the fees usually run for 20–25 years.
What the calculator does
For cash, the total is the system price plus yearly maintenance over 20 years — nothing else. For the loan, it computes the fixed monthly payment from your rate and term, multiplies by the number of payments, and adds maintenance. For the lease, it multiplies your monthly fee by 240 months. The chart then plots each option year by year so you can see exactly when the loan finishes its payments and how far ahead the lease line keeps climbing.
Loan payment = loan × rate/12 ÷ (1 − (1 + rate/12)^−months)
Cash usually wins — but not for everyone
On pure total cost, cash almost always wins because there is no interest and no fee. A loan at a modest rate is usually a good second choice: you keep your savings, cut the bill from month one, and still come out ahead of grid power. Leases only make sense in specific situations — for example if you have no tax liability to benefit from incentives, cannot raise the upfront money, and value zero maintenance responsibility. Always compare the real numbers, not the sales pitch.
The fine print worth checking
Before signing a lease or PPA, check: who owns the system and any incentives attached to it, what happens at the end of the term (renewal, removal, buyout price), whether the monthly fee escalates each year, and what the system's production guarantee is. For a loan, check the true annual percentage rate (APR), any origination fees, and whether early repayment is free — paying it off early after a few good summers can save a lot of interest.
Related tools
To work out what system size your bill justifies, start with the ROI calculator; to estimate annual production use the panel calculator; and to size the battery side of a financed system, the battery calculator. If you are going off-grid entirely, the home backup calculator covers that design.
Frequently asked questions
What is the difference between buying solar with cash and a solar loan?
With cash you pay the full system price up front and keep 100% of the savings from year one, with no interest charges. A solar loan spreads the cost over fixed monthly payments — you still own the system, but the interest you pay adds 20–50% to the total cost over a typical 10–20 year term. Cash usually wins on total cost; a loan wins if you prefer to keep your savings and still cut your bill immediately.
How does a solar lease or PPA work?
In a lease or power purchase agreement (PPA) a third-party company owns and maintains the system on your roof. You pay a fixed monthly fee (or a rate per kWh the system produces) instead of buying it. Monthly costs are predictable and there is usually no upfront payment, but you never own the system, you may get a smaller share of the savings, and the deal typically locks you in for 20–25 years.
Which financing option saves the most money over 20 years?
In almost every scenario, paying cash gives the lowest total 20-year cost because there is no interest. A solar loan comes second if the interest rate is moderate. Lease/PPA usually costs the most over 20 years, but it can suit people who cannot pay upfront and want zero maintenance responsibility. Use this calculator with your real numbers to see exactly how the options compare.
What monthly payment should I expect for a solar loan?
Monthly payments depend on the loan amount, interest rate and term. As a rough guide, a $15,000 system at 8% over 10 years costs about $182 per month; over 15 years about $144; over 20 years about $125. Enter your exact system price, rate and term in this calculator for a precise figure.
Does a lease or PPA make sense without a tax credit?
Leases and PPAs were popular partly because the installer could use the tax credit and pass some of it to you as a lower monthly rate. Without a tax credit, the economics of leases often weaken — the monthly fee stays high while the savings shrink. That is one reason more homeowners are comparing loans and cash carefully before signing any third-party deal.
How do I use the 20-year cost comparison chart?
The chart shows cumulative cost year by year: the cash line starts at the full system price and climbs slowly (maintenance only), the loan line adds monthly payments until the loan finishes, and the lease line adds monthly fees for the full term. The option whose line stays lowest over 20 years is your cheapest choice. All lines update live as you change the inputs.